Escala Condos’ Shocking Price Strategy Timeline

April 2008: Raising Prices to Entice Buyers—wait, what? (Awesome plan, Escala!)

Developer Lexas Cos. said this week that on June 5 it will raise the asking prices 3 to 7 percent for about 70 unsold units that have been on the market since last spring.

Another 22 units that will be released for sale May 1 also will have higher price tags.

Lexas principals John Midby and Eric Midby said prices are going up partly to send a message to prospective buyers: If they’re waiting to buy until prices drop, they’re reading the local market wrong.

July 2009: Some Luxury Condo Developers Finally Dropping Prices (not Escala!)

At Escala, another luxury downtown Seattle condo tower near completion, Eric Midby, of Lexas Companies, said the developer has no intention of reducing prices.

January 2010: Escala prices are scaled back (third story, scroll down)

Escala was completed last fall. Now it’s … dropping its prices.

“We’ve all been waiting for yesterday to come back,” said Bob Rennie, whose firm took over marketing of the 269-unit tower at Fourth Avenue and Virginia Street in November. “It’s time to make business decisions.”

Just five units have closed at Escala, according to county records. Rennie says 67 more buyers are under contract — but he knows that in this market, that doesn’t guarantee much.

They’ll all be contacted over the next few weeks and offered reduced prices as an inducement to stay, Rennie says without giving specifics.

Who could have possibly foreseen that raising prices on luxury condos as the housing market experienced the largest collapse in history would not succeed in enticing buyers? That’s just crazy.


About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

22 comments:

  1. 1
    AMS says:

    “We’ve all been waiting for yesterday to come back,”

    Yesterday…

    http://www.youtube.com/watch?v=ONXp-vpE9eU

    “I believe in yesterday.”

  2. 2

    You Gotta Live Somewhere

    Having said that, there will always be buyers, even in a buyers’ market; now let’s talk sound investment decisions:

    Would you buy a condo with a good chance it will turn into apartments in the future?

  3. 3
    AMS says:

    RE: softwarengineer @ 2 – “You Gotta Live Somewhere”

    Yea, we know what you’ve been promoting! That RV to escape from the kids.

    Why not count households, which generally go down during bad times. So, yes, “you gotta live somewhere,” but the number of households might be going down, even during a period of increasing population.

  4. 4
    anonymous says:

    Word on the street is the lender is basically calling the shots now. If Eric Midby still had a choice, he would stick with the price structure that has garnered them 5 sales in the last several years.

    http://www.urbnlivn.com/2010/01/22/big-shakeup-escala/

  5. 5
    Dave0 says:

    By softwarengineer @ 2:

    You Gotta Live Somewhere

    Option 1: rent free with parents

    Option2: overpriced luxury condo

    When you’re broke because you got laid off, you’re probably going to go with option 1 before option 2. It’s so suprising that people like John and Eric Midby don’t get that. Makes you wonder how they were intelligent enough to become principals with a major developer in the first place. Born into wealth maybe?

  6. 6
    Pegasus says:

    “Only when the tide goes out do you discover who’s been swimming naked.”
    Warren Buffett

    Proof once again that these people riding the real estate wave had no clue about reality nor realty. Anyone with a brain knew when they raised the prices after the bubble had ALREADY burst that they are at their best just conmen with low IQ’s. At their worst they are just bumbling incompetents who needed to be fired.

  7. 7
    Dave0 says:

    haha!

    http://www.lexascompanies.com/johnmidby.php

    “Having experienced the real estate cycles of the 70’s, 80’s and 90’s, John [Midby] had the foresight to see that the Las Vegas and Southern California markets were quickly on their way to becoming over inflated, so rather than pursue opportunities close to home, he came to Seattle, a market which is just coming out of a slump. John’s insight proved fortuitous, as the Las Vegas and Southern California markets took a serious hit, just as he and Joseph brought Escala to the burgeoning Seattle Market.”

    foresight… right…

  8. 8
    Dave0 says:

    RE: Dave0 @ 7 – even better… “John’s success and sustainability over the course of his long career has been guided by his uncanny ability to analyze and time market cycles and deliver premier projects that meet market demands.”

    what a load of BS. I don’t think “his uncanny ability to analyze and time market cycles” worked so well in Seattle…

  9. 9
    AMS says:

    RE: Pegasus @ 6 – Buffett’s annual shareholder letter should be out this month, or early next month. As always, I’m looking forward to it.

  10. 10
    AMS says:

    RE: Dave0 @ 8 – But, but, but, lowering prices is not his strategy. We all know everything would be just fine if we trusted Midby. We should all ask what the properties are really worth. I’m sure he’d be sure and tell us what a bargain Escala really is. Seriously.

    http://www.youtube.com/watch?v=dvpvlooR6hM

    I think he’ll make a great member of my Church of Real Estate. We all know he believes in ever increasing prices.

  11. 11
    anonymous says:

    I just can’t imagine how amazingly stupid the people who closed on these failed condo complexes must feel. Being one of 5 people living in a 160 unit building watching the market fall out from under you. Now everyone who hasn’t closed is being offered a discount from your price in the hopes that a few of them will close. It has to be horrible.

    Then again, maybe they are stupid enough to convince themselves it was a good idea.

  12. 12
    voight-kampff says:

    one of the five people who closed, paid cash ( ~2.5 million) I am guessing… or rather hoping he/she lives in fiji or something and just isnt following things, and maybe has few million to throw around at various bad ideas.

  13. 13
    joe dirt says:

    Not a lot of people who bought condos that expensive were first time buyers, so they may have sold their house at the top as well. It’s the poor schmuck who took on a big mortgage to get that dream house that is the big loser in this bubble.

  14. 14
    fabuladocet says:

    -“It’s time to make business decisions.”

    I’m not sure what sort of decisions were being made before now, but I for one take this as a positive sign that they are finally going to be making some business decisions.

    If they are going to drop prices, though, they may need to drop the lamely-veiled references to luxury vehicles (Lexas, Escala) in lieu of some equally badly-disguised, yet more accessible, name; like “Chavrolet” or “Suboru”.
    My dream of living someplace with a classy name like “Mercedies Tower” will have to wait.

  15. 15
    HappyRenter says:

    RE: voight-kampff @ 12

    Who knows, maybe Midby bought it himself, just to make others believe that the stuff is selling.

  16. 16
    anonymous says:

    By voight-kampff @ 12:

    one of the five people who closed, paid cash ( ~2.5 million) I am guessing… or rather hoping he/she lives in fiji or something and just isnt following things, and maybe has few million to throw around at various bad ideas.

    Only one person paid cash? I could imagine a fabulously rich person buying this as their 10th home, as a place to stay in Seattle, and they don’t give a rip about the cost. Could be Oprah’s Seattle escape in case she ever decides to come here. I don’t picture that type of person financing though. The fact that 4 of them were financed definitely increases the impact of the stupidity on those people, since it likely wasn’t just “walking around” money for them.

  17. 17
    Civilized says:

    This article is little more than a testament to the stubbornness and clingliness of the human ego, as it fears death (aka, change) at all costs. In fear, it clings more tightly to that which is needs to shed, in order to survive. Ignorance of self and lack of discipline is what causes this to happen. It demonstrates de-evolution and a move away from civilized society.

  18. 18
    fabuladocet says:

    RE: Civilized @ 17
    Scattered throughout your genealogy, Civilized, there were horny, undisciplined ancestors; but for whom you would not exist. My guess is that many of them, given the opportunity, would ask you to lighten up a bit.

  19. 19
    Genob says:

    So what are people’s best guesses of what a market clearing price for these units might be? I’m thinking it’s got to be somewhere near $400 a foot on average (lower than that on lower floors)… Which is probably below construction costs.

  20. 20
    Jackson Wallace says:

    Whatever people say about escala, its location is one of the best in the city, and the balconies and units are huge. This city is headed straight to gridlock with the continued amount of people that will move here as the SW dries out and turns into gang hell, which it already is. Driving sucks, especially as you get older. Downtown living is just fine, thank you. Sure, the developers are greedy and the city politicians are aholes for allowing this kind of gouging to go on as part of their supposed sustainable future. However, people acting high and mighty about their traffic, yokel and boredom infested sublurbs is a bit much.

  21. 21
  22. 22

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